the First rule of strategy is have an appetitie to do it.

I like strategy, when I see it developed and executed it’s a thing of beauty.  I love the game play and like deciphering what the competition is doing – incidentally imho Simon Wardley’s work is as ground breaking as it is simple)

But what is apparent to me is that a lot of companies talk about strategy, but actually have no appetite for it.

let me explain.  Recently I’ve recently had the fortune to have some catch ups with some of my old strategy colleagues. They have all cycled out of the business and for various reasons are now back ..they’ve come back wiser and with energy and lots of opinions… and many of the discussions we have (strategy being collaborative and benefiting from the network effect) often have a flavour of “ this business should”…. I’m listening to them, and its good thinking, but i know that the chance of it actually happening are virtually zero.

I know this because the moment i hear the world “should”, i know it won’t happen.  Should is a word we use to beat ourselves up.  It’s a forever word, one day maybe we’ll get onto that, a word that disempowers you… “i should go to the gym”… “I should spend more time with the kids”… “we should do that”.. “i should cycle in today”.  Well I can tell you, the days I cycle in are the ones I choose too, even when its subzero outside or raining.  There’s no question, no choice, I just do it.

I bet runners like Ben Kepes don’t say ” i should run today, they just plan it and do it. Founders of companies don’t say ” i have a good idea, i should do something about it”. They just get going and working on the idea.

Delivering on a strategy is the same.  Unless the business is up for it, focussed on that (and not the next fire / deal or trinket) the chances of success are very limited.

Next big question is how to get the business up for it.

 

What is your strategy…

you know,  the real one. The one that your company is actually implementing …. I guarantee you its different from the one you wrote.

Most companies have a strategy, its either a:

deliberate strategy – the annual plan using facts and analytics and assuming that we can foresee and somehow control what the next 12-60 months will be like, or

an emergent strategy – a rapidly evolving strategy based on quick feedback  from the real world and agility within the organisation

Everyone has a plan until they get punched in the nose – Mike Tyson

Both are valid forms of market response.  However I think theres a third category… your real strategy.

Strategy is determined by what comes out of the resource allocation process, not by intentions and processes that go into it

Clayton Christensen

Think about that statement. Where you actually focus your people, spend your money or development time is what your real strategy is.  And in many instances…there is a missmatch between the intended strategy and what actually happens

Some examples

Stated ” we want to be #1 in a growth market”   ———- > vs  giving people KRA’s with the first item being “protect the legacy revenue” – What you are actually saying if in doubt sell the old stuff before the new stuff

Stated ” lead in customer service”        ————-> vs ” lower costs in operations and build core products” – What you are actually saying don’t automate, don’t invest in customer service tools and squeeze more service down the existing channels… nice

Stated ” your local bank”    ————> vs “consolidate branches and drive people online” – What you are actually saying yeah local to a 50km radius, you really care

Stated ” We’re all in with the cloud”    ————> vs “release on premise products first and make it difficult to transfer licenses to the cloud model ” – What you are actually saying  whatever we say, we will force you to keep using our onprem products

Stated “Increase sales acquisition” ————> vs   ”  maintain sales opex” – What you are actually saying  miracle up more business for same spend and whatever you do, do not bump commissions!!

See the absolute dichotomy of these things. You are setting yourself up to fail, confusing the troops and wasting the market opportunities

A wise man told me once, to win, you need to get all the wood behind the arrowhead.

If you aren’t getting the results you want, perhaps looking closely at what policies, drivers, KRA’s and investment decisions you actually have running thru your organisation will give you some insight into why.

Compromise is a dirty word in the resource allocation process

Compromise, we all have to do it. Apparently its the way business works (sure does in my personal life!), staff engagement is driven thru buy in, everyone has a voice, and when you have a bunch of equally senior folks with conflicting drivers, you need to hammer it out… reach a compromise.

The only problem with compromise is just that, you don’t have clarity, you have a compromise. A middle ground of nothingness, a buggars muddle.

Strategy is determined by what comes out of the resource allocation process, not by intentions and processes that go into it. Clayton Christensen

As a strategy guy, I’m not a fan of compromise. I’ve seen too many good strategies get watered down by compromise. People insert wriggle room into the plan and you end up with a half baked delivery… Steve Job’s was a lot of things, uncompromising one of them, yet you can’t argue with the success he drove… is there a correlation? Apparently yes according to McKinsey‘s.

In a startling finding [that is sarcasm] , apparently if you adjust your resources depending on the initiatives relative market potential (that is put your resources behind the strategy, not everywhere) you get good results…. like 40% better total shareholder return. Empirical fact based evidence that compromise is bad for business.

So go forth, stay true to the direction, make choices!!!   be uncompromising,   get better results

Reality, choices and alignment.

It’s all I want in the companies I work for. Yet I see very little of it.  To me, all the management and strategy jargon out there just complicates things.

Reality.

Reality is important because it frames your worldview. Time and time again I see senior people ignore reality. You want some examples? RIM:” no seismic change” required? Hello, dude you are screwed!! ‘manage decline”, what kind of obscene statement is that? I mean first up, you are basically stating it’s ok to loose, worse that you have some magic trump card that allows you to control market shifts.  This is poison because your staff know its total rubbish and it sets people up for failure. . . . trust me I’ve seen people try to do this for years and I can attest to the fact that any ‘management’ of decline only happens in the minds of strategists and accountant. The rest is luck.

Choice.

People think they make choices every day, but the reality is they do it without fully considering the true impacts.  Take global warming, its is kind of hard to ignore the fact base that it is happening. At a personal level i don’t think people understand what they do to contribute or change this, they haven’t really had the choices explained to them….

Combustion of one US gallon of gasoline produces about 19.4 pounds (8.8 kg) of carbon dioxide (converts to 2.33 kg/litre), a greenhouse gas.[4][5]

Did you know that? that is a lot of C0!!!. How about wording the choices this way.. “you can keep driving your car and contributing to the pollution of the petri dish we call home, or you can find alternate transport, you choose”

Cigarette smoking – “you can keep smoking cigarettes, but you know that it causes all sorts of bad stuff to happen and if you get sick because of it, there won’t be any government or private health insurance to support you”

Business – man, so many examples ( dilbert lives on this stuff)

“We can’t decide what we are going to do” (which is a form of non-choice),  the impact of this is there is no guiding principles to make good choices about so companies will attempt to deliver everything… which means nothing gets done and everyone is unhappy

“we need to change, become more agile and cost effective”, but we will do this with the existing processes and cost base…. without a plan to address process and cultural overheads, this just won’t happen

“…most often the very skills that propel an organization to succeed in sustaining circumstances systematically bungle the best ideas for disruptive growth. An organization’s capabilities become its disabilities when disruption is afoot.” – Clayton Christensen, The Innovator’s Solution

“We need to be more innovative”, so you either choose to learn about / invest in innovation, sponsor, support and nurture new projects …or don’t.  One of these approaches has much more chance of success than the other

“you can launch that new thing, but you need to avoid canabalisation”   you just choose to waste your time and money. That new thing ain’t going anywhere. Good companies (like Apple) acknowledge canabalisation, then don’t get stopped by it because its actually just part product lifecyle

Another choice “lets cut costs but culling headcount” but we will do it before / without fixing the underlying systems and processes, all this means is that a smaller number of people are going to end up doing the same amount of work….  With the obvious results in output, quality and staff satisfaction…

Finally a segway into alignment “we want focus, here are five separate targets. “

Alignment .

Getting the company in motion, by ensuring that everyone is working in the same direction…. Sound so simple, but so often it never happens.

Multiple targets – a recipe for disaster… classics include hit your revenue and EBIT targets… or how about maintain share and price? Sound familiar?

What about different parts of the business being aligned? How many of you out there have given operations a cost reduction target while simultaneously giving product or sales an uplift? This causes conflict at best, it also hamstrings your growth. Some managers call this ‘healthy tension”… which is management school bullocks for misalignment

Finally my personal favourite piece of target tripe… manage decline in legacy business (ie maintain the status quo as best are you can) while simultaneously driving radical simplification…. That’s like saying go to war but don’t use guns … what are you supposed to do? Batchslap them into submission?  Have them laugh themselves to death by showing them your impossible targets?

Combine reality, true choice and alignment and you get simplicity and organisational alignment. Trust me (most) people have decent BS meters. They will naturally see if a plan, driver or goal is aligned with what they are targeted with or are doing. To quote Jason Jennings “in great companies everyone knows the strategy, and everyone thinks and acts like an owner”

Doing the hard stuff.

Jim Donovan post today highlighted the worlds top 50 business thinkers. The thing that struck me about this list is how many of the folks there are responsible for creating the theory of business growth, or for delivering it.  Why do they get this acknowledgement and respect? To me, its because these people do the hard stuff.

Growth is far harder to achieve than most of us are willing to accept. There is a bunch of research that highlights that the perennial growth story for any company is fiction. For example, Creative Destruction by Forster & Kaplan highlights that most companies not only fail to grow, but only a small percentage (16%) actually survive !  

Stop and think about that…. for 84% of you out there working. You are in companies that are dead men walking. 

Got me thinking about my own experience. You might have noticed, I’m a growth guy, I’ve even been called ‘Mr Disruption’ by some folks. Others think of me as a destroyer of value, god knows what they call me. 

What I do is hard, I’m constantly fighting the  machine  to get things done.

There is an almost religious battle going on. When I talk about disruptive innovation , the incumbent minded folks hear creative destruction.  I look forward and see opportunity, they look backwards and try to pinpoint the death knell (like the internet). Ultimately I advocate that we need to grow,  they counter it saying we need to cut costs. 

Heads up people. Cutting costs is the easy thing to do, giving a considered ‘no’ to new opportunity is simpler than taking it on.

Well here’s the rub, look at the stats from Foster and Kaplan (there are more**). If you are focusing on doing the easy stuff, something else becomes easy. Predicting the future of your company.

 

** Profit from the Core, Zook and Allen.

Blue Ocean Strategy, Kim and Mauborgne;

Good to Great, Collins

Stall points

Is Google goneburger?

Just some musings, based on no facts but…. Is Goggle heading for trouble?  Despite all their product development efforts & a significant amount of hype, they still only have one revenue stream, advertising.

On top of that the word is that they are loosing staff in large numbers due to growth pains.

Finally, look at their strategic stance or lack there of. Who are they strategically aligned with? Perhaps more importantly who have they rankled? MS, Yahoo, Apple, Broadcasters, news companies….Wouldn’t a more prudent stance be to take on just one of these giants (by partnering with their enemy) at a time??

When the market realises that there are no new revenue streams, coupled with a large list of enemies what do you think that will de to the sharp rice? And without that kind if capital, how will they get out this hole? There are parallels to the dotcom boom/ bust companies here (IMHO).

 

Thoughts?